Evidence

• Pages: 129-132

Page 129

Titan International, Inc. (Defendant) is an international tire maker based in Illinois. In June 1998, Defendant bought a controlling interest in Fabrica Uruguaya de Neumaticos S.A. (FUNSA), a tire manufacturer based in Uruguay. At that time, FUNSA had an existing line of credit in the amount of $5 million from Banco de la Republica Oriental del Uruguay (the bank).

FUNSA property and equipment secured the line of credit. In April 1999, Defendant asked for additional credit from the bank to fund FUNSA's operations. The bank agreed to increase FUNSA's line of credit by $1 million if Defendant would guarantee the increase. On April 19, 1999, Defendant executed a document called Garantia Solidaria (guarantia). Defendant agreed to serve as a surety for any debt owed to the bank by FUNSA, up to $1 million. The bank, accordingly, increased FUNSA's line of credit; a pledge of FUNSA's plantPage 130 and equipment (the collateral) secured this new debt as well as Defendant's guarantia.

On March 4, 2002, FUNSA declared bankruptcy under Uruguayan law. As of the date of the bankruptcy fi ling, FUNSA owed more than $4 million to the bank. On December 31, 2003, the bank transferred its FUNSA indebtedness to Plaintiff . This deal included all of its rights in the collateral and all of its rights against Defendant under the garantia..

The parties sought buyers for the collateral both before and after the bank transferred it to Plaintiff , but the parties could never agree on the terms of a sale. In March 2004, Plaintiff obtained a third-party appraisal of the collateral. The appraiser valued the collateral at between $1.5 million and $2.3 million. On May 6, 2004, Plaintiff sold its interests in the collateral, along with a number of other outstanding notes, to a third party for $2 million. Plaintiff , however, failed to notify Defendant of this sale in advance. The third party later foreclosed on the collateral, another party bought it at public auction pursuant to Uruguayan bankruptcy law for $1 million.

With about $2 million of FUNSA's debt left unpaid, Plaintiff then pursued other avenues of collection. First, It demanded that Defendant pay it $1 million, the amount of FUNSA's debt that Defendant had guaranteed. Defendant, however, refused to pay under the garantia. It contended, inter alia, that Plaintiff 's failure to provide presale notice had impaired Defendant's rights in the collateral that secured the debt. As a result, Plaintiff fi led this federal diversity action to enforce the garantia agreement.

During discovery, the district court issued a scheduling order that required the parties to disclose all of their expert witnesses by February 3, 2006. Defendant did not disclose any expert witnesses prior to that date. On February 21, however...